Calculate the amount of ‘Gross Profit’ when net loss is Rs. 75,000, Operating Expenses are Rs. 1,20,000 and
Sales are Rs. 3,00,000.
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The operating ratio of a company can be determined by comparing the operating expenses with the net sales. Smaller the ratio, higher is the efficiency of the business.
It is calculated as:
Operating Ratio = (Operating expenses/ Net Sales) x 100
= (Cost of Goods sold + Selling expenses + Administration
expenses/ Net Sales) x 100
= (1,20,000+80,000+40,000/3,40,000)x100
= (2,40,000/3,40,000)x100 = 70.58%
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